Hawks at the Federal Reserve are leaning towards raising interest rates! Hammack and Goolsbee both warned: inflation is a much bigger problem than employment.

Cleveland Fed President Hamaek and Chicago Fed President Gulspi both believe that the issue of inflation is far more serious than the issue of employment. This highlights that, as energy prices are driven higher by the Middle East conflict and the job market is still running at a slow pace, they are more inclined to support tightening rather than loosening monetary policy. It is reported that the two were asked to assess the economic situation using four colors - from "house on fire" red to "everything is fine" green - during an interview. Gulspi, when discussing the prospect of inflation against the backdrop of rising gas prices, said, "At least it's orange. And the situation has not been very good." "I was originally optimistic that we would return to the path of inflation falling to 2%, but recently it has been going from 'orange' to 'red' - tariffs have increased prices, which were supposed to diminish, but have not really diminished, and now we have added another layer of inflationary shock... This is a worrying moment." Hamaek is also concerned about inflation. She pointed out that inflation has been above target levels for five consecutive years and has been "basically flat" in the past two years. She said, "It is definitely in a brighter, more vibrant 'orange' range." The interview took place two days before the US Department of Labor released the March employment report. The report showed that since Trump began his second term in January last year, the monthly increase in non-farm employment in the US has reached the largest increase; the unemployment rate has dropped to 4.3%, mainly due to a large number of labor force exits from the labor market. Hamaek said, "For me, the best indicator is actually the unemployment rate," and currently this indicator is roughly at the level of full employment in her opinion. Although this state is "somewhat fragile," her assessment of employment prospects is between yellow and green - she joked, maybe yellowish-green, "or actually more like the color of Diet Mountain Dew that a colleague of the Federal Open Market Committee favours at interest rate decision meetings." Meanwhile, although the stock market has seen declines since the outbreak of the Middle East conflict, the overall financial system is still "basically green." Hamaek said that from a financial stability perspective, the economy is in a good state. In contrast, Gulspi's attitude is more cautious in these two respects. He rates the labor market as "yellow" because it currently shows low hiring and firing rates, which he attributes largely to ongoing uncertainty. As for the financial system, he is satisfied with the payment system but slightly more anxious about asset prices. He said, "There do indeed appear to be quite a few signs of bubbles," and it is currently unclear whether this is being driven by productivity or if it is a bubble waiting to burst.